Tie up money: At some point, many people, perhaps faced with an unexpected sum or extra income, get the idea of locking up some of their money. Blocking your savings, however, is not always the right choice and understanding how to extricate yourself from a maze of information may not be straightforward. Nevertheless, there are many commercial proposals in this regard, and those who aspire to set aside a fraction of their savings certainly have a wide range of choices and possibilities.
How to bind money
The deposit account, also known as a liquidity account, allows a person to block their money by permitting another person to prevent them from using it for a certain period. This way, it is possible to profit from the deposited amount. Each bank has its conditions, so, in this case, it is essential to go to your bank branch and consult an advisor to know everything there is to know about it. If the person decides to open an escrow account, he can do it both in his bank branch and online. Understanding that an escrow account is not synonymous with a regular checking account is essential.
Generally, the tied account can only be activated by people who already hold a current account and has specific characteristics that distinguish it. To connect the deposit bond to the existing account, the individual must provide various documents, including a copy of the tax code and identity card or other records of equal value. In the case of a current joint account, both persons must sign.
It is then necessary to provide the credentials of the bank relationship of which the person is already the holder and the IBAN code. Finally, the pre-compiled contractual model must be signed and delivered in person to the official, or it can be uploaded to the online platform for those who prefer to use the Internet. Another option is to send it by registered mail with an acknowledgement of receipt.
Suppose the person decides to set aside two hundred Euros a month for three years; this transfer of money from the current account to the deposit account will similarly occur.
When is it convenient to tie up money?
If tying up money is a relatively simple operation, you must ask yourself when it’s appropriate. This type of account obliges the person to give up using that sum as he sees fit. On the other hand, this waiver can be made fully aware of being repaid thanks to the interest recognized by the credit institution. At the back of the contractual relationship, the individual can find a lot of money from this financial instrument.
Although the benefits may vary from one bank to another, some of the most common ones include an increase in the interest rate in proportion to the agreed period for the invested amounts, the possibility of releasing the sums even before the end of the agreed period, the absence of risk of losses or reduction of the invested capital. Furthermore, the terms for closing the account are transparent and accessible, and there are no opening fees.
Every person who aspires to invest a sum in this way, especially if we are talking about a large amount and for an extended period, must objectively evaluate their financial and personal situation, perhaps with the help of a consultant. A person who does not have significant savings aside and who may need, in an emergency, every single Euro in the current account may think twice before tying up the money, primarily if this constraint does not provide for the possibility of terminating the contract before the end of the agreed period.
